1991 (6) TMI 54 - HC - Income Tax

Summary

Issues involved: Assessment of undisclosed income, penalty under section 271(1)(c) of the Income-tax Act, 1961, disclosure of income in the return, validity of penalty imposed.

The judgment pertains to an assessment year where the assessee declared income from a crossword puzzle prize, which was later deemed as income from undisclosed sources by the Income-tax Officer. Subsequently, penalty proceedings were initiated under section 271(1)(c) of the Income-tax Act, resulting in a penalty being levied on the assessee. The Inspecting Assistant Commissioner upheld the penalty, citing collusion between the assessee and the organizers of the competition. The matter was then taken to the Income-tax Appellate Tribunal, which canceled the penalty based on a previous decision. The Tribunal referred questions to the High Court for opinion.

The High Court considered whether the disclosure made by the assessee in the return was sufficient to avoid penalty under section 271(1)(c). It referenced previous cases where false disclosures were made to conceal unaccounted income. The Court held that the disclosure in the return was not genuine and was made to hide the actual source of income. It was noted that the assessee did not provide evidence to counter the presumption under the Explanation to section 271(1)(c). Consequently, the questions related to the adequacy of disclosure were answered in the negative against the assessee.

Regarding the third question, the Court observed that the Tribunal did not address key aspects related to whether the impugned amount was truly income earned by the assessee. As this question did not arise from the Tribunal's decision, the Court deemed it unnecessary to provide an answer. The Court also clarified that if there were other contentions to be raised, the assessee could do so before the Tribunal for proper consideration.

Ultimately, the reference was disposed of with no order as to costs, emphasizing the importance of accurate disclosure and the consequences of attempting to conceal income.